Ethics In Business

The Importance of Ethics in Business

Recent events in corporate America have demonstrated the destructive effects that occur when the leadership of a company does not behave ethically. One might wonder how such gifted, highly; savvy organizations such as Enron, Tyco, and WorldCom got themselves in such of a big mess! Well, I am here to tell you that the answer lies within the idea and importance of business ethics.

"Business ethics should be interpreted as the standards of conduct of individual business people as well as the business as a whole." Running a business ethically is good for business as well for society, because, customers and consumers get a chance to see business performed to an optimum when a company has the presence of business ethics.

CEO's, Presidents, and Vice-Presidents, are expected to run their business as most effective as possible in order to attain profitable returns and assets. A successful and profitable business can be a major influence toward the common good of society, but at the same time lack the presence of business ethics. The problem lies in a company's mission statement! CEO's are supposed conduct

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their businesses and time worrying about doing good for society and their customers, but, in most cases, this objective is rarely achieved because of lack of profitability. We as a society sometimes set's a double standard for company's and organizations because, most companies cannot perform both objectives at the same time without one objective being inefficient.

Associating ethics in business is very important because a business that behaves ethically induces other businesses and their associates to behave ethically as well! "If a company exercises particular care in meeting all responsibilities to employees, customers and suppliers it usually is awarded with a high degree of loyalty, honesty, quality and productivity." For example: employees who are treated well ethically will more likely behave ethically themselves in dealing with customers and business associates. "A supplier who refuses to exploit its advantage during a seller's market retains the loyalty and continued business of its customers when conditions change to those of a buyer's market. A company that refuses to discriminate against older or handicapped employees often discovers that they are fiercely loyal, hard working and productive."

I have come to understand that a good man or woman who attempts to try to be ethical somehow always overtakes his immoral or amoral counterpart in the long

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run. I mean ethical in the definition of doing the right thing and making the right decisions. A reasonable explanation on ethical behavior are, when individuals operate with a sense of confidence regarding the ethical soundness of their position and their mind and energies become freed for maximum productivity and creativity. On the other hand, when practicing unethical behavior, the individual finds it necessary to engage in superfluous actions and conflicts, resulting in decreased effectiveness of success.

The best way to promote ethical behavior is by setting a good personal example. Teaching an employee ethics is not always effective because an individual can always predict how one should act and demonstrate ethical behavior and at the same time, being taught the exact opposite by someone's actions other than of ethical behaviors. In other words, the definition of ethical behavior is consistent across the board, but the difference between someone understanding the idea and performing lies in people's actions!

A perfect example of this is when, Kenneth Lay, Martha Stewart, and Dennis Kozlowski, former CEO's of General Motors, who willingly closed down plants and laid

off thousands of workers. I am quite sure that they understood ethics, but were either too far to away from truth that thousands of people were going to be out of jobs, ethical standards did not register in their minds or they simply did

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not care. They were all receiving multi-million dollar salaries and bonus packages at the time when the company was closing.

I feel people at the top of an organization are expected to share the burden of cost reductions and share the same hardships during difficult times. Top executives, Vice Presidents, etc., of companies who freeze assets or take a personal pay cut in a traumatic year rather than lay off employees to cut costs deserve commendation. However, this does not mean that a company should lose site in it's future goals, not be able to adjust various structures in their organization, or change technology that would require less people to do the actual work! The important fact to understand is that, "decisions should be made with empathy and thought to those who will be affected by their decisions."

In today's society, we have been rocked by series of scandals from major fortune 500 companies, which include, Enron, WorldCom, Tyco, Arthur Anderson, CitiGroup, etc. Many of these companies were considered industry powerhouses and declared bankruptcy, which was mainly due to a great deal of ethical failures. "In Enron's situation, their Board of Directors voted to suspend the company's, ethics code, and that while the company had a strong ethics program on paper, there was in practice very little education and training and employees did not

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have an effective means of raising concern other than going directly to managers who may have been involved in unethical activities."

Business ethics Is not about morality, but about the establishment of transparent norms of interrelationships. An ethical business enterprise demonstrates its social concern through its internal functioning and is not limited to acts of giving and caring. "Business ethics is respectful of the stakeholder and not just the shareholder. The stakeholder includes not just the